Gangsters and Bankers

By TAN Kee Wee
(MediaCorp 938LIVE’s Money Talks, Thursday, 17 September 2009, 7.50 am and 7.20 pm)

In 1972, there was a blockbuster movie named “The Godfather” based on the novel by Mario Puzo. It was a story about an Italian Mafia family in New York and how they conducted their business in the decades after World War Two.

The youngest son in the family, Michael Corleone, was unlike his father and brothers. He was not part of the family business, which involves a large dose of violence and illegal activities.

At the start of the movie, Michael was a decorated US Marine war hero. He was seen telling his girlfriend about his father’s criminal life and how much he hated it. He assured her that he would not go down that path.

As the story unfolded, his eldest brother was murdered and his father seriously injured after an attempted murder. This was the critical moment which altered Michael’s outlook.

He may have wanted to legitimize the family business when he became the Mafia boss. But circumstances did not permit this. In the end, Michael stepped deeper into the Mafia culture and adopted its violent ways.

I bring this story up because there are always critical moments in a leader’s life when idealism is replaced by realism. Because changing things might risk destroying the whole system we feed upon.

When Barack Obama went on his presidential campaign late last year, his campaign slogan was “change we can believe in”. This had instant mass appeal because we were all suffering from the collapse of Lehman Brothers.

Then, nearly everyone agreed that Wall Street was due for a fundamental change. Wall Street’s attitude of “heads I win, tails I’m bailed out” could not continue.

Today, one year later, not much has changed in Wall Street. The US government has spent most of the past year trying to save the financial industry, rather than to transform it.

Instead of being closed down in an orderly fashion, the big US banks have restructured only around the edges. And only a handful of the unregulated hedge funds have closed down.

The trading of derivatives, which was in the centre of last year’s chaos, is still not regulated.

Except for Bernard Madoff, executives at most financial institutions have not been prosecuted. Worse, Wall Street bonuses are returning back to pre-crash levels.

Like Michael Corleone, Barack Obama must have faced a critical moment when his idealism was tested and abandoned. This must have been in March, two months after he took office. That was when global stock indices fell to all-time lows, and the collapse of the US economy was a possibility.

That must be the moment when Obama’s negative view of Wall Street took a turn. Like Michael Corleone, who was initially against the use of Mafia soldiers, President Obama had no choice but to rely on the very unpopular bankers.

Because no one else, but these large financial institutions in Wall Street, have the support of Congress, have the means to influence the direction of the global markets, and are in the position to save the US economy.

In the end, Michael Corleone did it to protect his loved ones and the family business. Barack Obama did it to uphold the presidential oath he took to preserve, protect and defend the United States. For all they care, the rest of us in this world can “sleep with the fishes” (translation: die).